STRATEGY SHEET
April 1998
Technology Could Increase
Retirement to 35 Years or More
© Talbot Stevens
On February 22, 1997, something happened that the brightest minds on the planet thought would never, ever be possible ... something that has a huge impact on pension funds, the health care system, and most importantly for investors: how much money is needed to retire comfortably.
That day, a sheep was born that was a perfect genetic replica of another. The significance of this special sheep, named Dolly, is much more than the fact that it proved cloning was possible.
Even the smartest scientists in the world were not aware of how far technology had advanced already, of what was possible, and what would be possible in the future. If this “impossibility” was achieved before the year 2000, we have to wonder what else is possible — and probable — in the decades ahead.
Is it really science fiction, that some day in the next 30 years, or the next 3 years, a similar medical breakthrough could add 10 years to our life spans overnight?
Most people are aware of the fact that human life spans have been increasing over the last century.
In 1920, the average life expectancy for a baby girl was 61. By 1990, it had increased to 81, an increase of 20 years in a 70-year period. The latest statistics indicate that a 65-year-old male is expected to live until age 80, women until age 85.
This means that half of 65-year-old women will not be alive at 85, and half will live longer. Ten percent of women currently live to at least age 96!
This means that half of 65-year-old women will not be alive at 85, and half will live longer. Ten percent of women currently live to at least age 96!
If you wanted a retirement plan that had a 10% chance of failing — a 10% chance of running out of money — you would plan to have sufficient funds to last until age 96. But it wouldn't be enough.
We also have to realize that life spans are a moving target, that could significantly increase due to accelerating technology.
Longer life spans coupled with people retiring earlier means that the retirement period is not only longer than ever, it will continue to increase, possibly to levels that we can't even fathom today.
This obviously has a critical impact on how much money is needed to retire, especially for those considering early retirement.
Conventional, old-fashioned ideas such as moving to “safe” guaranteed investments when you retire will have to be rethought if our retirement period is going to last for 35 years or more.
Annuities, which guarantee a pension as long as you live, become more attractive if people suddenly start living 10 years longer than anticipated.
All fear mongering aside, we must accept and plan for the fact that many boomers will live past 100, especially if technology adds 10 to 20 years to our life spans.